New Paradigms for Transpacific Collaboration 121 CHANGING DYNAMICS OF THE NORTH KOREAN SYSTEM Paik Haksoon * CONTENTS I. Introduction II. Four Critical Choices: Meeting the Challenges of the Times III. Changing Party-State-Military Arrangements in North Korea IV. National Security and Economic Development in Light of North Korea–U.S. Relations V. New Thinking VI. Prospects and Implications * Paik Haksoon is currently the Director of the Inter-Korean Relations Studies Program and the Director of the Center for North Korean Studies at the Sejong Institute in South Korea. Dr. Paik is also a policy adviser to South Korea’s Ministry of Unification and heads the ministry’s Policy Evaluation Committee. Several ideas and arguments presented in this paper first appeared in earlier works (Paik 1995; 1998; 2001; 2003; 2004a; 2004b; 2005) and are presented here in substantially the same form. 122 U.S.–Korea Academic Symposium I. Introduction North Korea has recently shown signs of rapprochement with the outside world by agreeing to the denuclearization of the Korean peninsula at the six-party talks. The changing dynamics of the North Korean system can be explained by changes in the interplay among interacting key actors in North Korea and the structure in which the key actors are arranged or positioned. The structure defined by the arrangement of its actors could be explained by the rules and resources. And the structure could be divided into two kinds: domestic and external (Waltz 1979, chapters 3 and 5). One salient characteristic of the changing dynamics of the North Korean system is that the challenges of the times have exerted a decisive influence on the changing dynamics of the North Korean system, particularly since the collapse of the Soviet Union and the East European socialist states and the unification of Germany. For the strengthening of national security and the achievement of economic development in an effort to meet the challenges of the times, the North Korean system has had to accommodate changes in the arrangement of the key actors in terms of power, official ideologies, and policy choices, which has brought about the dynamics of change in the system itself. The changes in the North Korean system and structure have produced changes in the key actors’ behaviors and performances because the system or systemic effects have constrained the actors. During the past 15 years or so, the North Korean leadership has made four critical choices to meet the challenges of the times, choices that reveal the changing dynamics of the North Korean system. I will first review North Korea’s four critical choices in order to provide an overview and identify clues to the changing dynamics of the North Korean system. After this, I will deal with the changing arrangements among the party, the state, and the military in order to identify which actors played what key roles in meeting what challenges of the times, particularly national security, system security, and economic recovery and development.1 This will lead to a discussion of North Korea’s effort to achieve security and economic reform and identify North Korea’s changing policy priorities as it has tried to meet the challenges of the times. Finally, the North Korean system today, which is the product of all of the above dynamics, will be described as “overloaded” and “secularized”; and the prospects for the North Korean system and its implications will be discussed. 1. The key actors in North Korea are the “supreme leader,” the party, the state, and the military. Recently—since the introduction of market reforms in July 2002—economic actors such as firms and households have also become important actors, but these economic actors are not regarded as key power institutions in North Korea and will not be covered here. New Paradigms for Transpacific Collaboration 123 II. Four Critical Choices: Meeting the Challenges of the Times During the past 15 years or so, North Korea has made four critical choices to survive the unprecedented political, security, and economic hardships it has faced: the first choice was made in the early 1990s, the second in 2000, the third in 2002, and the fourth in 2005 (Paik 2003, 59–87; 2001, 7–13; 2004a, 3–4; 1998, 54–55; 1995, 17–50). Early Reforms and Opening to the Outside—Early 1990s The most urgent problem occurred in the early 1990s when the Soviet Union and the East European socialist states collapsed and North Korea had to overcome its economic and security crises caused by these events. In an effort to induce foreign investment, North Korea designated the Rajin-Sonbong strip along its east coast as a free economic and trade zone and promulgated various laws and regulations. In the meantime, North Korea began to seek ways to open a high-level dialogue with the United States and normalize relations with Japan. Also, in December 1991, North Korea concluded with South Korea the Agreement on Reconciliation, Nonaggression, and Exchanges and Cooperation, and together they entered the United Nations. In 1992, North Korea also issued a joint declaration on the denuclearization of the Korean peninsula with South Korea, and in 1994 North Korea made a critical decision to give up its nuclear weapons program by signing the Agreed Framework with the United States. These critical measures in external political and economic relations, which took place in 1991–94, could be regarded as North Korea’s serious attempt to adapt policy to the changing international structure in order to enhance its survivability by securing its security and economic interests. Note that these reform and opening measures were limited to the external realm only. The North Korean leadership’s intention was to keep the domestic sector intact and thus protect its own form of socialism by obtaining political and economic cooperation and assistance from the outside—the United States, Japan, and South Korea. Contacts with South Korea and the United States—2000 In 2000, North Korea made another round of critical choices: inter-Korean summit talks and a dramatic improvement in North Korea–U.S. relations. In June 2000, North Korean leader Kim Jong-il held the first-ever summit talks with South Korean President Kim Dae-jung in Pyongyang. Jointly the Korean leaders issued a declaration. This historic event provided new momentum for improvement of relations not only between the two Koreas but also with the United States and the international community (Albright 2000b). 124 U.S.–Korea Academic Symposium In October 2000, the first deputy chairman of the National Defense Commission (NDC) of North Korea, Vice Marshal Jo Myong-rok, in the capacity of a special envoy of Kim Jong-il, visited Washington. Jo carried Kim Jong-il’s message that he was willing to improve relations with the United States and solve various problems, including the missile issue. Kim Jong-il demanded a security guarantee for North Korean sovereignty and territory from the United States (Jo 2000; Albright 2000c). On 12 October, the United States and North Korea issued a joint communiqué that provided a golden chance for a dramatic improvement in relations between the two countries (DOS 2000). Kim Jong-il, through Jo, also invited President Bill Clinton to visit Pyongyang. Secretary of the State Madeleine Albright paid a return visit to Pyongyang that month and discussed with Kim Jong-il President Clinton’s possible visit to North Korea as well as pending problems, including the missile issue (Albright 2002a; 2002d). In addition, the sixth round of the U.S.–North Korea experts’ meeting on missile talks was held in Kuala Lumpur, Malaysia, in early November 2000. North Korea’s offers and compromises in the second half of 2000 with regard to the North Korean missile issue were “unprecedented” in scope (ITF 2001). It was said that the United States and North Korea needed just one more high-level negotiation, which did not materialize, regarding the North Korean missile issue before President Clinton would decide whether to visit to North Korea. Reforms in the North Korean Economy—2002 A third critical choice was made on 1 July 2002: North Korea announced an epochal policy designed to improve its economy by introducing market elements into its economic management system (Choson Sinbo 2002; KCNA 2002). Reform measures included abolishing “free rationing” of food and daily necessities, discontinuing subsidies to factories and firms for carrying out production and distribution activities, decentralizing economic planning and management except in some key strategic areas, expanding the autonomy of the business administration of firms and factories, introducing capital goods exchange markets, introducing prices based on real production factors, decentralizing decisions about prices, elevating the role of currency in economic management, increasing salaries to meet the costs of food and necessities, and devaluing the North Korean currency against the U.S. dollar. These measures were designed to introduce reform in the domestic economy, unlike the two previous critical choices that dealt with external areas. In the latter part of 2002, North Korea also attempted to improve relations with Japan; designated Sinuiju as a special administration district, Mt. Kumgang area as a special tourist zone, and Kaesong as a special industrial zone; and issued the DPRK–Japan Joint Declaration in Pyongyang (KCNA 2002). New Paradigms for Transpacific Collaboration 125 Promise to Denuclearize North Korea—2005 On 19 September 2005, in the joint statement of the fourth round of the six-party talks, issued in Beijing, North Korea made the fourth critical choice by agreeing to the denuclearization of the Korean peninsula. Almost three years had passed since U.S. Assistant Secretary of State James A. Kelly visited Pyongyang in October 2002 as a presidential envoy and a second nuclear crisis occurred in Korea: the United States raised the new issue of North Korea’s clandestine highly enriched uranium program, accused North Korea of violating the 1994 Agreed Framework, the 1992 North and South Korea joint declaration on the denuclearization of the Korean peninsula, and the Nuclear Non-Proliferation Treaty (NPT); and stopped delivering heavy fuel oil to North Korea.